#'(LAMBDA NIL NIL)

Returning nothing of value.

Previous Entry Share Next Entry
Moral hazard and the "rules are rules" crowd.
Seriously
flewellyn
So, foreclosures. They're happening a lot, a lot more than they should, and for bad reasons. We all know this.

I came upon this story here, in which a group of Occupy Atlanta people set up camp on the lawn of a police officer whose home is being foreclosed upon, to try and block the eviction. I applaud this move and any like it. But, it seems, the commenters were not all of the same mind.

I noted a number of posters complaining about this as somehow immoral, allowing people to "live in homes they haven't paid for" or something like that. Two things I have to say in response.

First, we know that the banks have been engaging in widespread fraudulent foreclosures. We know that the banks have engaged in fraudulent mortgage lending, and fraudulent securitizing of known high-risk mortgages. Given this fact, ANY foreclosure in today's economic and regulatory circumstances is highly suspect. So, why do they want to blame the victims, instead of the perpetrators? I suspect the "just world" fallacy, but I can't entirely rule out less savory mindsets.

Second, it is in society's best interests to keep people in their homes. Foreclosure should be a last resort, not a routine action, and loan modification, restructuring, payment assistance, even forgiveness of debt in extreme hardship are all preferable and very supportable actions by the banks, or by the government. Kicking people out of their homes and disrupting their lives is bad for society at large, and constitutes a much greater moral hazard than "letting" people "get away with" not repaying the full mortgage, if they are truly unable.

So, in closing, I say that this moralizing about "rules are rules" and "how dare someone get away with this" is entirely misguided. Contracts are not the highest moral law, and in fact, it is often necessary to abrogate them, and to forgive debts, when the social and economic landscape has become too unbalanced. The mentality that those less fortunate who need help are "getting away with" anything is highly immoral.

Indeed! But the "rules are rules/moral hazard" crowd will of course think that it's all your fault.

"Just world" means never having to say you're wrong, it seems.